Saturday, 28 February 2015

Public body fears hold back subletting plans

The government is holding back from giving housing associations the same powers to tackle subletting as local authorities due to fears over their status.

Officials are concerned that if housing associations were given the power to prosecute tenants who sublet properties it would raise questions about whether they are public or private bodies.

The status of housing associations is important legally and financially as it affects how they can be run, and how historic debt held on their books is classified.

The government issued a consultation yesterday (Wednesday) on creating a new offence of tenancy fraud. This would allow tenants who sublet their properties to face criminal rather than civil charges, meaning they could face up to two years in prison and fines of up to £50,000.

The consultation proposes to give local authorities the power to bring prosecutions for tenancy fraud. It states it would not be ‘practicable’ to extend the same power to housing associations, but notes they could bring private prosecutions, or work with local authority partners on a case.

Housing associations would also be blocked from using new proposed powers to access data about tenants. Under the plans in the consultation, local authorities would get improved access to information from banks, building societies and utility companies to help them identify if properties are being sublet.

Housing associations would not be able to access this data directly, because of concerns about the implications giving them this power could have on their private status, and would instead have to work with local authorities to use the information.

The consultation notes: ‘We envisage joint working arrangements being extended to enable housing associations to benefit from any new powers given to local authorities.’

It also states that the introduction of a criminal offence of tenancy fraud would not prevent social landlords using civil proceedings to evict subletting tenants, and they should ‘consider what the best enforcement approach is in the context of a particular case’.

Reaction to the subletting proposals has been mixed. David Orr, chief executive of the National Housing Federation, welcomed the plans.

‘Criminalising subletting will mean that the profits will become the proceeds of crime and will be available for confiscation on conviction. This is a very serious penalty, in addition to the loss of the tenancy, which is the usual sanction at present,’ he said.

But Lindsey Williams, chief executive of Futures Housing Group, warned that seeking a criminal prosecution should be a last resort. ‘If tenants are sub-letting because they are genuinely struggling to cover their rent and other bills, then we should be offering help before beginning legal action,’ she said.

Shadow housing minister Jack Dromey backed the move to criminalise subletting, which was instigated by Labour housing minister John Healey in 2010, but suggested the government is not looking at the bigger picture.

‘The vast majority of people living in council houses pay their taxes and play by the rules,’ he said. ‘The real problem is that this Tory-led government’s failed economic policies led to a catastrophic 99 per cent collapse in the building of affordable homes in the last six months.’

Readers' comments (10)

  • Rick Campbell

    Sometimes I think that the government is not only not looking at the big picture, but also isn't looking after anyone but themselves or their mates.

    Perhaps this particular policy needs a darned good dose of looking at in detail -- IH posters revel in that sort of thing -- best, therefore, to keep it away from Stan and Ollie?

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  • Would this just relate to General Needs tenants for RSL's or would it extend to leaseholders as there may be a large number of Shared Ownership leaseholders who are subletting their properties in breach of their lease.

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  • Gavin Rider

    Rick - whichever way you look at it, social tenants should not sublet their homes any more than private tenants should.

    The only reason for doing so is to use the house for private financial gain, and that means receiving money that does not rightfully belong to the tenant. It is theft, pure and simple - it's similar in principle to claiming jobseeker's allowance while simultaneously working part time at the local supermarket but not declaring it.

    This tendency could be virtually eliminated by means of my suggestion to raise social rents to the same level as market rents, then to compensate those on low income with higher housing benefit payments. This would mean that the recipients of financial benefits would be regularly "screened" and would have to make signed statements about their personal circumstances - false statements would therefore constitute fraud and would be punishable in the normal way.

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  • Rick Campbell

    Spot on there Gavin about the profiteering and sub-letting.

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  • The recent (ish) decision of Weaver v. London & Quadrant, a human rights case deemed that housing asoication are hubrid public bodies for the purposes of their housing management functions, therefore bringning them in line with councils.

    I wonder if this has any effect here?

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  • Joe Halewood

    I suspect there is an element of deflection in the above story and its more political than genuine. Is sub-letting a criminal offence in the private sector? Asking that simple question explins the point Im making.

    As far as I know it isnt and there is no plans to make it a criminal offence and certainly not the political will of this government to make it a criminal offence.

    Gavin - I take your points on sub-letting and it is plainly wrong yet your plan to equalise social and private rent while taking away the profit margin I agree would increase the HB bill by £2.77 billion per year. And that assumes many more social tenants would not have to claim HB as their rents increased which they would.

    As a very clever comment on her yesterday said in response to Shapps spin over this issue, where is he goign to imprison the 160,000 alleged sub-letters? We have less than 90,000 prison spaces and Shapps spin would have us believe that there are more social housing sub-letters than double the combined murderers, rapists, fraudsters and all other criminals engaged in this - and thats just in social housing.

    This is a classic case of Shapps use of knee-jerk policy pronouncement - spin some superficial figure that sounds good, get massive and widespread media coverage of the same, then announce a consultation.

    The cause is right, no doubt, but for once how about a policy that enables the problem to be dealt with in a cost-efficient manner which is why this policy has been held back before, it costs too much to stop it.

    Bull and bluster again from Shapps

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  • Rick Campbell

    Not so sure it was his knee he was jerking Joe. could have been someone's chain?

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  • Of course when seeking to eliminate fraud one should focus on the small fry and ignore the rampant fraud in the square mile

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  • Gavin Rider

    Joe - the objective of my suggestion is to use the income from increased rents for new housing construction, transferring the responsibility entirely to the housing providers, and to remove grants from the HCA budget to balance out the public expenditure.

    As more social homes get built and start to bring in even more money for more housing, this will have a stabilising if not deflationary impact on the housing market and ultimately the housing benefit bill will fall again.

    The difference with this scheme would be that more social houses would cost the public purse less, whereas with public subsidy being used to help ensure profitability for the providers public outlay is higher the more housing is built.

    The suggested scheme would be fairer for all, not just for the lucky few.

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  • If only tenants knew how badly some HAs manage tenants data by sharing it here ,there and everywhere already and it appears from my own experiences that the most personal data is openly shared between many agencies and HAs and is often exagerated and 'spun' to suit the purpose of the data processor. From my experiences they never obtain your consent, and if you ask about what theyve been sharing they wont tell you.

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